The average cost of college is nearly $40,000 a year and it only seems to be getting more expensive each year. It’s not uncommon that after scholarships, grants, and any federal financial aid you might be awarded, you still have a “financial aid funding gap”. The gap represents how much it will cost you out of pocket to go to college after applying all other sources of financial aid.
For many families this cost is not something they can simply write a check to cover, adding stress when trying to pay for tuition, fees and other educational expenses. It’s important to know what your gap is and what your options are to bridge it, so you can successfully plan and pay for college.
What Is a Financial Aid Funding Gap
A financial aid funding gap is the cost left over after subtracting all your gift-aid like scholarships and grants and federal financial aid such as work study and federal student loans from the total cost of attending college. The amount left over is the price you still need to pay to cover tuition, textbooks, fees, housing, meals and any other educational related expenses. Often, this difference is more than most families can easily cover.
Imagine you been awarded $15,000 in financial aid, which includes scholarships, grants, and federal aid. However, the total cost of attending college is $20,000. This means there’s still a $5,000 gap that needs to be filled. This is a common situation for many students—according to recent data, one in five students received less financial aid then expected, leaving families to pay for nearly 48% college out-of-pocket with over 20% borrowing money to cover the costs. Knowing how to manage and bridge this gap is important so can pursue your education without added financial stress for your family.
Causes of the Financial Aid Funding Gap
There are several reasons you might find yourself with a funding gap and understanding them in advance can better help you prepare for them.
Rising College Costs
College tuition has been rising steadily for years, often increasing faster than inflation. This means the cost of earning a degree keeps getting higher, while the distribution of scholarships, grants, and federal aid programs hasn’t kept up. Even if your child qualifies for some aid, it may not be enough to cover the soaring costs of a college degree.
Financial Aid Limitations
Federal financial aid is extremely helpful, but it may not cover your full financial need. When you fill out the FAFSA®, it considers your family’s individual financial situation to determine how much need you qualify for. Even if you qualify for the maximum amount of aid, due to caps and loan limits, it’s possible to still have money due to the school out of pocket. And if that’s after you received maximum federal funding based on financial need, then that most likely means you don’t have the extra cash to cover the gap.
Overlooked Costs
Everyone tends to look at tuition as the price of college but it’s only one of many costs required to attend college. There are supplies like laptops and other technology, textbooks and fees, not to mention housing and meal plans. These in addition to personal expenses or health insurance, these costs could easily widen the funding gap.
Strategies to Bridge the Funding Gap
Don’t lose hope. There are options available to help bridge the funding gap and keep your educational goals intact. Let’s explore some of the more popular ways to supplement your financial aid:
Private Loans
An easy option but one that must be taken seriously are private student loans. Private loans are different than federal loans, most private lenders don’t offer the same benefits you’ll get with a federal loan, such as income driven repayment or the potential for loan forgiveness.
Additionally, private loans offer both fixed and variable interest rates. Variable rates might start out low but could go up over time if market conditions change, costing you more money over time. If you consider a private student loan, be sure to exhaust all other funding options and do your homework, comparing lenders and fully understanding the terms before accepting a loan.
Institutional Aid
Schools have state funding which can be used to offer aid to students . Check with your school’s financial aid office to see if you can appeal your financial aid or apply for additional resources that may be available. If your financial situation has changed, you can apply for and see if you can receive additional aid.
Because school budgets are limited, it’s best to fill out the FAFSA as soon as it comes out. Many times, financial aid is distributed on a first come first serve basis and when the money runs out, there’s no more aid to be had. You don’t want to miss out because you forgot to submit your FAFSA in a timely manner.
Part-Time Jobs
While most students would prefer to focus on their studies, a part-time job could help cover college costs and help you stay away from loans. Businesses that surround college campuses typically have opportunities for part-time jobs with flexible schedules that work around a student’s need. The extra money will surely help, and the workplace skills and time management practices will prove valuable when starting your career.
Create a Budget and Focus on Cost-Cutting
A financial aid funding gap happens when there's a difference between how much college costs and the amount of aid you receive, like scholarships, grants, or loans. There are ways you can help bridge the gap and make college more affordable.
Budget Wisely
The first step to managing the funding gap is creating a clear, realistic budget. Start by tracking your expenses, write down what you spend daily or use budgeting apps that make this easier. Prioritize necessary items like tuition, books, and food, while limiting unnecessary purchases. By knowing exactly where the money is going, you can make smarter spending decisions.
Reduce Spending
Look at cost cutting in practical ways to save money, such as renting textbooks instead of buying them or borrowing from the library. If possible, live at home instead of in expensive dorms or apartments. Another option is using campus meal plans, which can often be more cost-effective than eating out regularly.
Explore Additional Scholarships
It’s never too late to search for scholarships. Many scholarships are available year-round for different majors, activities, or personal achievements. Apply for as many as possible, why not, it’s free money. Check with local community organizations, professional associations related to their field of study, or even religious or cultural groups. Online platforms like Edvisors or Scholarships.com are also fantastic tools.